Cash-strapped KRON is letting advertisers buy into news broadcasts. The boss says it's just a sign of the times.

Evelyn Nussenbaum, Special to The Chronicle

Published 4:00 am, Wednesday, April 5, 2006

"Australia Week" was a major production for the financially strapped KRON (Channel 4). For five straight days in early March, the station dedicated three hours of its five-hour morning newscast to their reporters' adventures Down Under.

There were segments touting "Sydney by Hot Air Balloon," "Shopping in Sydney," "a look at the varieties of fish found in Australia and the many ways of preparing them" as well as a sit-down interview with an Australian tourism official, during which a KRON reporter noted "the diversity of an Australian vacation, whether you're interested in nature, urban areas or both."

If this sounds like a travel brochure for the country, it was. Tourism Australia, the government body that promotes travel to the country, paid the airfare of the station's six reporters and their food and lodging expenses. In addition, Tourism Australia shelled out an undisclosed amount for advertising time on KRON during the special.

The special and others like it have raised more than a few eyebrows in the newsroom. "We're appalled," said one staffer, who declined to be named, fearing retribution. "We essentially let the government of Australia become our news directors."

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To Mark Antonitis, KRON's general manager, the encroachment of advertising into programming is just the reality of print and television news today. KRON, until it was purchased six years ago by Young Broadcasting from the Chronicle Publishing Co. (which also sold The Chronicle to the Hearst Corp.), was one of the most respected broadcast outfits in the region, known for its deep bench of reporting talent, in-depth stories and documentaries.

But now business is bad. And "when business is bad, you have to consider opportunities," said Antonitis. "And you have to be creative and do things you might have found difficult in the past." KRON's average rating for its morning news in early March was 1.14, extremely low, with approximately 28,000 households tuning in.

Citing a weak advertising market, Antonitis said he is looking for new ways to make money. That includes charging "product integration fees" to advertisers who want to be included in a story. In February, KRON broadcast an 11-part "Spa Spectacular," in which each featured spa paid a fee -- he won't say how much -- and bought advertising. Anchors offered viewers a chance to buy half-price spa certificates at the end of each segment.

Antonitis is not the only news executive experimenting with letting advertisers inside his newscasts. Reporters at Univision's KMEX in Los Angeles have an arrangement in which they interview Kaiser doctors and patients for health stories and shoot footage at Kaiser facilities because Kaiser Permanente pays a fee in return. Fox affiliate KPTV in Portland, Ore., told the Hollywood Reporter that it recently launched "More Good Day Oregon," a lifestyle-themed extension of its morning news, in the hopes of luring such integration deals. A recent KPTV show featured a local shopping center in a story about last-minute gifts.

Newspapers are not exempt, either. Late last year, the San Francisco Examiner agreed to start labeling a restaurant review column as advertising after media watchdog Gradethenews.org published the fact that the column was produced solely to attract restaurant ads and that the reviews were uniformly positive.

To observers inside and outside KRON, the recent turn of events boils down to a simple question: Is it better to produce advertising-driven "news" than no news at all? Most journalists would choose the latter. While product integration is common in the entertainment business, it's still an anomaly in the news world.

"We draw a strict line between news and sales, and we don't do product placement on our news," said Dan Rosenheim, news director at CBS 5-TV (KPIX). He added that the station does not accept any kind of freebies, including travel. "If this policy is violated we would reimburse, and it might be a disciplinary issue internally."

KTVU News Director Ed Chapuis described a similar policy: "All of KTVU's news reporting is produced without pressure or influence from advertisers."

Among the other local major stations, KGO declined to comment and KQED did not return calls by press time.

"This is fine for any advertiser who wants to get exposure; I don't blame them," said Aly Colón, who teaches ethics at the Poynter Institute for journalists. "But it's a death knell for any news organization that wants to maintain its credibility."

Tension between bean counters and journalists is as old as the profession. Journalists have been wringing their hands for years over the blurring of the traditional lines between news and advertising departments. In 1995, Carol Marin, WMAQ Chicago's star reporter, was suspended for three nights after refusing to end a fire safety story by listing retailers that carried fire safety brochures, because the retailers had also sponsored the report. She ultimately resigned.

The Los Angeles Times' editorial credibility took a hit when the Los Angeles Times Business Journal broke the story that its publisher had agreed to share ad revenues with the Staples Center sports arena, after the Times devoted an entire issue of its magazine to the arena's opening. The incident caused deep divisions between the Times' executive leadership and newsroom.

But the economic pressures have never been this bad, say executives like Antonitis. And when the choice is laying off more employees or making journalistic compromises, Antonitis is clear on where he comes down. "I really don't like to lay people off, and there are lots of families that are counting on me to protect them from the ups and downs of the economic cycle."

Antonitis said he is protecting KRON's credibility by disclosing all partnerships in scripts or the credits. A typical disclaimer, he said, might read: "KRON4 and such-and-such a spa have teamed up to bring you these half-price deals." He also insisted that integrations and contest giveaways are limited to the morning news hours, when viewers expect lighter fare. "You have to find appropriate places inside appropriate newscasts," he said, "and if a hard-news story came along, we would blow out the paid stuff. KRON has maintained full editorial control."

The pressure on Antonitis and those in his industry is real. Advertising growth for local television stations is slowing, squeezed by the proliferation of cable channels and the Internet. But KRON has an additional burden -- the loss of its NBC affiliation four years ago and, with it, the network programming that attracts the highest-priced advertising.

The station also has a corporate parent with a crushing debt load, incurred at least partly by the purchase of KRON itself. Young Broadcasting, which owns nine other television stations in the United States, paid a record $823 million for KRON in 1999, beating out NBC. But the company never made the money back. Young lost $91 million in 2005, doubling its loss from the year before, and carries $782 million in debt. Young's stock has plummeted from a high of $79 a share to $3 in the past eight years. Few Wall Street analysts even bother to cover the company anymore. Antonitis won't say whether KRON itself is making money, although TV newsrooms typically don't make a profit. Sponsor integration is just one of the ways he's trying to stay afloat. Newsroom insiders estimate that half the staff has left, either through layoffs or attrition. They include producers, editors and reporters, including high-priced talent such as Emerald Yeh. Antonitis has replaced standard two-person news crews with one-man bands he calls video journalists, many of them young and inexperienced. They carry their own cameras, do their own interviews and edit their own footage. Last week, KRON signed a deal to become an affiliate with the new FOX network, MyNetworkTV, which targets demographically desirable 18- to 45-year-old men. The hope is that deep-pocketed advertisers will follow.

It's not clear whether the disclaimers for the Australia and the spa stories were detailed enough for KRON viewers to understand the new business arrangements, so it's difficult to know if they cared or even noticed. But faced with the prospect of laying off more people or, in the worst-case scenario, cutting out the news, Antonitis is betting that putting advertisers into newscasts will keep news programming alive.

"Some things we try will work, and others won't," said Antonitis, who added rather cheerfully, "Not one viewer has complained about any of these initiatives."

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